Burgess & Town Council of Borough of Pottstown v. Pennsylvania Public Utility Com'n

• Decision Date: 16 April 1941
• Docket Number: 286-1940
• Parties: Pottstown Borough, Appellant, v. Pennsylvania Public Utility Commission
• Court: Pennsylvania Superior Court

19 A.2d 610

144 Pa.Super. 220

Pottstown Borough, Appellant, v. Pennsylvania Public Utility Commission

No. 286-1940

Superior Court of Pennsylvania

April 16, 1941

Argued December 10, 1940.

Appeal from order of Pennsylvania Public Utility Commission Application Docket No. 34577, in case of The Burgess and Town Council of the Borough of Pottstown v. Pennsylvania Public Utility Commission.

Proceeding before Public Service Commission upon petition filed by borough for certificate of public convenience approving acquisition by borough of the plant and property of a water company.

The facts are stated in the opinion of the Superior Court.

Order entered by Public Utility Commission denying petition. Borough appealed.

Errors assigned, among others, were various findings and determinations of the commission.

Appeal sustained; order reversed.

Edmund C. Wingerd, with him C. Edmund Wells and John W. Hoke, for appellant.

Herbert S. Levy, with him Harry M. Showalter, for appellee.

Before Keller, P. J., Cunningham, Baldrige, Stadtfeld, Parker Rhodes and Hirt, JJ.

OPINION

Keller, P. J.

This appeal is concerned (1) with the procedure to be followed by a borough which seeks to acquire the ownership of the works and property of a company furnishing water to the public in the borough, with special reference to the time when it must secure the consent of the Public Utility Commission to such acquisition. And, also, (2) how this is affected by the fact that the proceedings for the acquisition of such property were begun when the Public Service Company Law of July 26 1913, P. L. 1374, and its amendments and supplements were in force and effect, but were not completed on June 1, 1937 when the Public Utility Law of May 28, 1937 P. L. 1053, which superseded and repealed it, went into effect.

The proceeding was instituted under clause 7 of the 34th section of the Corporation Act of April 29, 1874, P. L. 73, p. 95, 15 PS § 1353, which, in part, reads as follows: "It shall be lawful, at any time after twenty years from the introduction of water or gas, as the case may be, into any place as aforesaid, for the town, borough, city or district into [in?] which the said company shall be located, to become the owners of said works, and the property of said company, by paying therefor the net cost of erecting and maintaining the same, with interest thereon, at the rate of ten per centum per annum, deducting from said interest all dividends theretofore declared."

Article III, section 3, of the Public Service Company Law provided, inter alia, as follows: "Upon like ^[1] approval of the commission first had and obtained, as aforesaid, ^[1] and upon compliance with existing laws, and not otherwise, it shall be lawful -- ....

"(c) For any public service company to sell, assign, transfer, lease, consolidate, or merge its property, powers, franchises, or privileges, or any of them to or with any other corporation or person.

"(d) For any municipal corporation to acquire, construct, or begin to operate, any plant, equipment or other facilities for the rendering or furnishing to the public of any service of the kind or character already being rendered or furnished by any public service company within the municipality."

On June 9, 1936, while the Public Service Company Law was in force and effect, the Borough of Pottstown filed its petition with the Public Service Commission asking it to issue its certificate of public convenience approving the acquisition by the borough, under the provisions of the Act of 1874, aforesaid, of the water plant and property of the Pottstown Gas & Water Company, which had been furnishing water to the public within said borough for more than twenty years.

After various proceedings, not necessary to be recited here, the Public Utility Commission -- which had succeeded to the Public Service Commission under the provisions of the Public Utility Law -- on March 27, 1939, determined that the applicant was not required under the Public Utility Law to obtain a certificate of public convenience evidencing its approval of the proposed acquisition and held that the application was outside the commission's jurisdiction.

Following the filing of a petition for a rehearing, the commission on September 1, 1939, notified the borough that if it would amend the form of its application to one seeking approval of the transfer of the water plant of the Pottstown Gas & Water Company to the Borough of Pottstown, under section 202(e) of the Public Utility Law, it would take jurisdiction and would then issue an order rescinding its previous action and proceed with the determination of the case on its merits. This suggestion was complied with and the amendment made, but on July 31, 1940, the commission filed its report and order denying the petition, on the ground that it lacked jurisdiction to consider and grant it. The borough appealed.

It will be noted that the Public Service Company Law did not prescribe when or at what stage in the legal proceedings, which the municipal corporation institutes to acquire the works and property of the public service company, it was required to obtain the approval of the Public Service Commission -- as evidenced by its certificate of public convenience -- to the acquisition by it of the works and property of the public service company.

A like uncertainty had existed before the passage of the Public Service Company Law as to the legal procedure to be used under the Act of 1874, supra, when a municipality was desirous of acquiring the works and property of a company which had furnished water or gas to the public within its limits for twenty years, pursuant to the seventh clause of section 34 of the Act, and it was necessary to obtain information respecting such cost and the declaration of dividends, etc., in order that the municipality might determine whether it could constitutionally borrow the money required for such acquisition. This latter uncertainty was resolved by the Supreme Court in the case of Williamsport v. Citizens' Water & Gas Co., 232 Pa. 232, 81 A. 316 (1911), 81 A. 316, which ruled that a preliminary mandamus, and not a bill in equity, was the appropriate remedy to obtain the books and records of the company for the purpose of securing the necessary data, and also, if desired, to make a physical examination of the company's works and property. It was held, however, that in this preliminary mandamus proceeding a subsidiary issue was first involved respecting the question of the municipality's financial ability under the law to purchase the plant, and this, in turn, raised issues as to the assessed value of the city's real estate, the amount of its indebtedness and its borrowing capacity, in addition to the issue as to the cost of the plant, its maintenance and the dividends declared; for a mandamus would not issue for a vain or useless purpose or merely to satisfy curiosity. Hence if on such a preliminary proceeding the evidence plainly showed that the works and property of the company greatly exceeded in value the amount which the municipality could raise under the law, it was not in a position to make the purchase, and hence was not in a position to force the company to submit to an investigation of its books and properties. But where it could be shown that the probable price which would have to be paid for the company's property was within the borrowing capacity of the municipality or approximated it, the mandamus would issue to enable the municipality to make a full investigation and, after securing sufficient knowledge to qualify it to submit an intelligent offer, if that offer should be refused, the plaintiff could demand another or second mandamus to compel the company to convey its plant to the muncipality upon payment of the estimated price. The company could then take issue on the figures submitted by the municipality, and there would be a common law trial to adjudge the issues thus raised.

To compel the municipality to embark upon the second mandamus, or even go into the main issue of the first mandamus proceeding, until a preliminary examination of the subsidiary issues involved in the first mandamus had determined whether there was a likelihood of the municipality's borrowing capacity at least approximating the amount required to be paid for the company's works and property was held by the Supreme Court to be a sheer waste of time, money and effort.

This was the procedure marked out by the Supreme Court when the Public Service Company Law was passed in 1913. See also, New Brighton Borough v. New Brighton Water Co., 247 Pa. 232, 93 A. 327.

Following the effective date of that Act, the Supreme Court decided several cases which throw considerable light on the question here involved.

In Bellevue Borough v. Ohio Valley Water Co., 245 Pa. 114, 91 A. 236, (1914) it held that the proviso to clause 7 of section 34 of the Act of 1874, supra, which granted power and jurisdiction to the court of common pleas of the proper county to hear, inquire and determine whether the charges of the company for gas and water were just and reasonable was repealed by the Public Service Company Law which conferred that power upon the Public Service Commission.

In New Brighton Borough v. New Brighton Water Co., 247 Pa. 232, 93 A. 327, (1915) it held that proceedings for the acquisition of water works by a municipality since the Public Service Company Law of July 26, 1913, P. L. 1374, will be invalid unless they have been previously sanctioned by the Public Service Commission thereby making the securing of such...